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Tobias Borris
How visionary thinking and commercial acumen helps a video streaming giant to identify opportunity areas beyond the obvious and tap into the $4 trillion wellbeing market.
Summary
A leading entertainment service faced stagnating user growth in the competitive SVOD market. A 4-week exploration revealed that SVOD providers have a unique advantage in their direct consumer relationships and user data access. One key opportunity explored how streaming providers could address rising mental health concerns and loneliness by tapping into wellbeing-related markets. This approach could transform a threat into a growth opportunity, accessing markets such as non-alcoholic beverages ($376 billion), wellness tourism ($242 billion), beauty ($92 billion), and toys ($33 billion). For comparison, the global SVOD market is currently valued at $43.9 billion. The project generated "what if" scenarios and early-stage concept ideas, supported by consumer and commercial rationales, macro trends, and investment signals. An example was the "BFF" in-app feature, designed to encourage in-person social interaction among subscribers. This strategic thinking has shown some alignment with Netflix's subsequent actions, including a Chrome extension for virtual watch parties and ventures into consumer goods. The future will show to what degree the company is willing to go beyond entertainment and seize the multi-billion-dollar CPG market. There's a strategic opportunity to create consumer products that cater to existing fanbases and beyond by leveraging streaming platforms to understand people's hidden desires and deliver them directly to their homes.
Challenge
As more companies entered the subscription video on demand (SVOD) space and began competing for consumers' limited viewing time, Netflix made headlines as its user growth stalled domestically. While this is a typical market dynamic in a crowded market, it is particularly critical for pure-play companies like Netflix to continually attract new subscribers and stay ahead. At the same time, the company pursued growth strategies comparable to those of its competitors (e.g. programming, international expansion, pricing models, etc.), raising the question what additional opportunities there are to outpace the competition in the long run.
The following outlines my thinking where pure-play media companies should also play to unlock future growth.
Approach
Insights
I conducted in-depth commercial research into the SVOD category, other ancillary entertainment segments, and the business models of key competitors, as well as a qualitative investigation into changing consumer behaviors - provided the strategic foundation for any further thinking.
Category Framework
My research showed that the hidden advantage of streaming providers lies in their ability to engage with consumers around the world through an owned channel in a personal and direct relationship, while being emotionally invested in their content. This allows SVOD players to draw their customers deeper into their ecosystem and use their platform not only as a pipeline for content distribution, but also as a springboard for the design of new products, services and experiences - based on the vast amount of data generated by movie and TV fans.
Insight
Your children will never be as eager to play chess again as after watching The Queen's Gambit.
Moreover, I uncovered that the greatest commercial value for SVOD companies comes from leveraging the power of their platforms to tap into non-streaming categories that are much more profitable than the streaming market itself.
Strategy
Based on these insights, I created various opportunity spaces* which reimagine how entertainment companies like Netflix can leverage their SVOD offerings to unlock new commercial growth.
* Opportunity spaces are the connective tissue between insights and product solutions. They bring focus to where a company can create the greatest value and serve as guidance and inspiration for the development of new value propositions. Each space lies at the intersection where the greatest consumer needs meet the greatest commercial advantage, and can be brought to life through a suite of physical products, digital services and experiences.
One space explored how streaming providers could use their service to create a haven for people experiencing significantly more worry, sadness, anger - and loneliness. This issue is significant as phone addiction has been linked to rising teen suicide rates, as well as a spreading loneliness epidemic, as screen time replaces in-person social activities that are critical to our happiness.
Opportunity Space Example
By applying its storytelling expertise to a variety of wellbeing-related markets, Netflix could turn what might be a potential threat to its license to operate into a positive: tapping into the non-alcoholic beverage ($376 billion), wellness tourism ($242 billion), beauty ($92 billion) and toy ($33 billion) markets with new value propositions that provide relief to users in times of anxiety and help them live more fulfilling lives.
Under this umbrella theme, several directions emerged posing questions like:
What if...
... entertainment companies applied their expertise in storytelling to create
new consumer products that deliver moments of surprise and positivity?
... streaming providers supported users to lead healthier lifestyles?
... entertainment companies enriched their streaming experience by
catalyzing in-person social interaction rather than blocking it?
In addition to these thought starters, each direction was supported with a consumer and commercial rationale, as well as macro trends and investment signals. It included an indicative size of the commercial opportunity and a description of the larger transformation that can be initiated through this. I also created initial ideas to indicate what potential solutions might look like. One notion was the in-app feature "BFF" which Netflix would use to encourage subscribers to reunite with old friends: Only by meeting up with a friend in person can users unlock an exclusive collection of movies and series. "BFF" not only helps attract new subscribers and increase stickiness, but also supports differentiation, brand likability, and word of mouth.
Early-stage Idea
Outcome
In 2020, Netflix introduced a Chrome extension that allowed users to watch shows with friends remotely (think: long-distance movie nights). The feature helped connect users virtually, but did not directly address the need for face-to-face contact, which may help further differentiate the platform.
A year later, Netflix also ventured into consumer goods, setting up a branded merchandise website and working with up-and-coming designers to release limited editions of its series and films. It will be exciting to see how the company will define its long-term CPG strategy, and to what extent this will be based on the success of its beloved IP. The future might bring up the question of whether it can make sense to produce merchandise that picks up on the cultural themes behind the title (e.g. the 80s nostalgia of Stranger Things) without directly referencing the series.
Key Services
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Consumer Research, including research planning, recruitment, interview execution, synthesis, insight creation
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Commercial Research, including market analysis and segmentation, business model analysis, insight creation
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Opportunity Identification, including transformational question and hypothesis development, ideation, opportunity sizing, high-level concept development
Duration
4 weeks
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